Retail sales, Great Britain: July 2017

• In July 2017, the quantity bought (volume) in retail sales increased by 0.3% compared with the previous month, due to strong sales in food stores at 1.5%; recovering from a fall of 1.1% in June 2017.

• All other sectors except food and household goods stores declined on the month for the quantity bought in retail sales.

• The underlying pattern in the quantity bought, measured by the 3 month on 3 month estimate, shows an increase of 0.6%.

• The quantity bought increased by 1.3% compared with July 2016; the 51st consecutive year-on-year increase in retail sales since April 2013.

• Online sales increased year-on-year by 15.1% and by 0.3% on the month, accounting for approximately 16.0% of all retail spending.

Commenting on today’s official retail figures, Ole Black, Office for National Statistics Senior Statistician said:

"The underlying trend at the beginning of 2017 showed a relatively subdued picture in retail sales. Strong food sales have been responsible for the growth of 0.3% in July compared with June, as all other main sectors have shown a decrease. Whilst the overall growth is the same as in June, trends in growth in different sectors are proving quite volatile."

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 2 July 2017 to 29 July 2017. Unless otherwise stated, the estimates in this release are seasonally adjusted.

The Retail Sales Index (RSI) measures the value and volume of retail sales in Great Britain on a monthly basis. Data are collected from businesses in the retail industry and the survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the retail industry at current price and at chained volume measures (removing the effect of inflation). Unless otherwise stated all estimates included in this release are based on seasonally adjusted data.

The RSI is an important economic indicator and one of the earliest short-term measures of economic activity. It is used in the compilation of the national accounts and widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision- and policy-making.

Summary information can be found in the Summary Quality and Methodology Information report.

Table 1 shows percentage changes for both the value and volume of sales.

As shown in Table 1, retail sales increased for both the amount spent and quantity bought in July 2017.

Looking at the recent 3 months on the previous 3 months, the amount spent showed similar growth to the quantity bought for all retail sales, which suggests that prices are beginning to flatten. This is illustrated in Figure 1.

While the average store prices are stable in 2012 and 2013, both the amount spent and quantity bought flatten in terms of growth. As prices begin to decrease in January 2014, consumers begin to spend more, increasing both the value and volume series. As prices begin to rise in September 2016, both the value and volume series begin to stabilise with a notable slowdown in growth.

The growth of 0.3% in the quantity bought for all retailing is due to the increase seen in food stores in July, as all other sectors except household goods stores decline in sales on the month. Since nearly 40 pence of every pound is spent in food stores, the weighted contribution for food offsets the declines seen in other sectors.

Growth in food and non-food stores contribute to the overall growth of 0.7% for the amount spent in stores, although this is driven by food stores. Textile, clothing and footwear, along with household goods stores increase in sales on the month, while non-store retailing remains flat and all other non-food stores decline.

In predominantly food stores in July 2017, compared with June 2017, the amount spent increased by 2.0%. The quantity bought increased by 1.5%, driving the monthly growth in retail sales. This growth in food is recovering from a decline in sales in June 2017.

The underlying pattern in the quantity bought, measured by the 3 month on 3 month estimate, shows a decrease of 0.4%, following two monthly falls in May and June of 0.7% and 1.1% respectively.

When compared with July 2016, there is an increase in both the quantity bought and amount spent of 0.2% and 3.1% respectively. The relatively low year-on-year growth for the quantity bought may be explained by the increase in average store prices of 2.8% in July 2017 compared with July 2016. This was the largest year-on-year increase in food prices since October 2013.

At the beginning of the time series, the quantity bought was fairly consistent as the amount spent increased with steady price rises. As food prices flattened between 2013 and 2014, there was volatility in both the amount spent and quantity bought. When food prices climbed to their highest in the series, the general trend in the quantity bought remained relatively flat, showing that consumers are less likely to cut down on essential food items when prices are rising. Changes in consumer purchasing are more evident when prices start to decline, as seen in late 2014. As the average store price began to decline, the quantity bought increased, implying that consumers bought more whilst prices were low.

The quantity bought in the latest 3 months to July 2017 was the same as the 3 months to July 2016, showing stable year on year growth.

Looking at the monthly growth contributions for July 2017, food stores were driving the overall growth for both the amount spent and quantity bought.

While the quantity bought within non-food stores remained flat on the month, the declines in petrol stations and non-store retailing were offset by the positive contribution to growth in food stores of 0.5%.

A similar picture is seen with the amount spent, where the positive contribution in non-food stores is offset by the decline in petrol stations, and with no contribution from non-store retailing, the contribution of 0.7% from food stores equals the total retail sales contribution.

The quantity bought in non-store retailing is the main contributor to growth on the year, as non-food stores remain flat and the positive food store contribution is offset by the fall in petrol stations.

The amount spent in retail shows positive contributions to growth across all sectors, with a notable slowdown in contributions to growth from petrol stations; contributing the least amount at 0.1%.

Internet sales are estimates of how much was spent online through retailers across all store types in Great Britain.

In July 2017:

• average weekly spending online was £1.1 billion; an increase of 15.1% compared with July 2016

• the amount spent (value) online accounted for 16.0% as a proportion of all retail spending, excluding automotive fuel, compared with 14.5% in July 2016

The only international estimate of retail sales available for July 2017 was published by the US Census Bureau on 15 August 2017. In its advanced retail trade estimates for July 2017, they include the amount spent in the US retail industry, including motor vehicles and parts and food services.

Eurostat also published their latest estimates of the volume of retail trade across the European Union on 3 August 2017 for June 2017. This shows the seasonally adjusted volume of retail trade in both the euro area (EA19) and EU28 when compared with May 2017.

Data for Northern Ireland are published by the Northern Ireland Statistics and Research Agency (NISRA).

It should be noted that accurate comparisons cannot be made against these or other international statistics due to a variety of reasons, including, differences in methodology.

Our Monthly Business Survey (MBS) for retail sales measures output from the retail industry in Great Britain. It samples 5,000 businesses, with all businesses employing over 100 people or with an annual turnover of more than £60 million receiving an online questionnaire every month.

Further qualitative data or information and summary tables can be found in the attached datasets. This includes data on:

• response rates
• standard errors
• revision triangle
• distribution analysis

The Retail sales Quality and Methodology Information report contains important information on:

• the strengths and limitations of the data and how it compares with related data
• uses and users of the data
• how the output was created
• the quality of the output including the accuracy of the data